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***$270 Million Streaming Media Market
(May 5)
by Amanda Rogos
Rob Glaser, founder and CEO of RealNetworks opened the RealNetworks Conference & Exhibition in San Francisco with a 90 minute pep rally about streaming media and the future of downloading over the Internet. He cited statistics such as 61 million worldwide RealPlayer registered users, 15.5 million active users in the United States, 160,000 downloads per day, and over 1700 live radio/TV stations broadcasting streaming media.
He admitted that the streaming media market, now at $270 million is only scratching the surface of the broadcast market which is $120 billion. Yet RealPlayer's business has doubled since last year and there are over 400,000 sites with streaming media content on the Internet.
Glaser stated that there are four pillars to streaming media, technology, ubiquity, content, and the surrounding ecosystem. RealNetworks has been building their ecosystem by partnering with companies such as America Online, Intel, Lotus, Microsoft, Oracle, Netscape and Sun. They are building content with the same partners and ubiquity by supporting IBM EMMS, AT&T's a2b, Liquid Audio, and planning to support the music industry's SDMI to assure users security. On the technology side, RealNetworks announced the Jukebox, which had more than 100,000 downloads on the first day. The Jukebox allows users to record music from CDs onto their hard drive to produce personalized song lists, to find and download music on the web with links to content sites and net radios, and to record MP3 or Real Audio to listen to on the go.
Announcements made at the conference included the Lyra, a digital device from RCA that is the size of a beeper, to be used with earphones as a player for downloaded music from Jukebox and a RealSystem G2 Advertising application, which uses the existing infrastructure of a website and adds streaming media seamlessly to help market a website's products. They also announced the RealServer G2 version 6.1, with ISP hosting and improved Surestream broadcasting tools, RealProxy, a joint development with Inktomi, and RealPlayer update for Windows and a RealPlayer G2 final release for the Macintosh.
Other attendees seemed as optimistic as Glaser. At a ZDTV Silicon Spin taping, a speaker sited a Forrester prediction that downloadable music would be a $1 billion market by 2003. Another estimated that the CD online market was at $140 million in 1998 and would grow substantially this year.
Where will the future be? Glaser stated that RealNetworks is, "Going from simply streaming to the wide amount of ways people get media...to a seamlessly integrated world." According to Glaser this will mean interactive newspapers that use video clips instead of the written word, A/V searches on the net, and direct A/V links to specific data that users can find easily and anywhere. He believes that half of streaming media users will have access to broadband by 2002, 20% of those users will be in the home and therefore this will be accessible and possible. RealNetworks is betting on it.
Introduction
At 4th Wave for the last 5 months we have been consumed by our multiclient study on Information Appliances. At times we just could not keep up with the news as we also sought to carry out our obligations under the study. Things are looking up now that the report has been released. We recognize that some of our coverage has not been as complete as we would have liked.
As many of you know our approach to understanding and evaluating markets leans to the analytical side. This study was a tremendous learning experience as it stressed our analysis methodology as we probed for answers. Getting buried in numbers, various fragmented data points and, in some cases, incomplete data was a challenge - especially when the task was to understand the underlying trends and to look forward. From all of this we were able to develop a plausible end game for the development of the market over the next 10 years. The results have been very well received. With these insights we have a foundation from which to make new observations and extend/challenge our thinking. This was especially the case this week during the Embedded Processor Forum, which we reported on in WAVE 9046.
We believe that there is a significant shift in the market taking place now. Yet, one can counter that these are incremental steps that, in the end, will have little consequence. Why is this not the Network Computer all over again, one might ask? It was just a flash in the pan only to disappear. Or, another observation could be that it is just preposterous to claim that the PC is facing declines. Both the report and our observations this week only reinforce the conclusion that major changes are underway. This short article is to collect some of these observations and to address some of the questions posed by - what are the implications?
Times of Turmoil
Consider the following as indicators of the state of the turmoil in the computing, PC and 3D industries.
With the stock market at 11,000 virtually all the traditional metrics of evaluation have been discarded. Valuations as multiples of P/E ratios are being tested at new heights. Underlying much of this turmoil is inverted economics which now implies that revenue, profitability and market value are not related. This is very important in the technology sector because the market is the source of growth capital. Yet, inverted economics cannot sustain itself. Company evaluation must eventually be linked to the value it creates for its shareholders. Yet, by looking at the trends in the stock market one could certainly doubt the last sentence.
There is a major asymmetry in the market in digital connectivity at work and at home - no pun intended for our friends at @Home. That is, at work narrowband connectivity is virtually non-existent while broadband it is omnipresent in the form of 10mb/s or beyond Ethernet, while the totally opposite situation prevails in the home. Broadband connectivity is virtually non-existent and narrowband is omnipresent. This asymmetry is responsible for significant market turmoil in the rush to correct it. Yet, fundamentally this is a last mile problem that is very expensive to rectify. Yet, the stock market and investment decisions are coloring actions to address the asymmetry. Just look at the AT&T deals to scoop up cable companies, as an illustration. As we observed in the study - infrastructure is where the action is in the early development of new markets. Another element of turmoil is that the best connect rates, when broadband passes the home as part of the cable infrastructure, are only 15% of the cable homes passed. Why do not consumers want this great technology with the same enthusiasm as those offering it is an obvious question.
Technology, largely in the form of digital products, is seeking to impact consumers and create large new markets. Yet, consumers, which is the mass market, could care less that it is digital. For those of us in a technology centric world it seems crazy that consumers do not appreciate the fine technology we have for them. Much has been made about technology based toys but they remain a trace market compared to the $15 billion toy market which had 3.4 billion units with a net ASP of $4.51 in 1998. When market reality collides with market expectations it creates turmoil. The techno-centric world is clueless about the consumer.
Disruptive technology, i.e., see Clayton Christensen and his book Innovator's Dilemma, is creating no end of turmoil. Disruptive technology has been with us all along but now we have some metrics from which to judge it. One end result of such disruption is the life and death of companies - certainly a factor of turmoil. One could ask the question is the Internet a disruptive technology? Or, even, are Information Appliances disruptive technology? Our conclusion is very much - yes. However, to understand these forces one must go well beyond the elemental characteristics of disruptive technology. Yet, there is no doubt that a substantial component of today's turbulence is due to disruptive technology.
In order to protect market greed and the consumer's disrespect for property values it has reached the point that virtually every shred of content will or could be copy protected. This may make Hollywood feel good but keep in mind that the consumer has yet to speak via the market. How many copy protection standards bodies have had consumer representation on them? The market voting on Divx has certainly not been overwhelming in favor of the forces of protection. Turmoil lies ahead on this one.
Close to home, companies centered in 3D technology crave for stability. Yet, profits are elusive, the pace of technology appears to move faster that Moore's law, the PC increasingly competes with the home video game platform and mainstream business applications refuse to appear. Consider this simple observation - 3dfx, a relative upstart in the 3D chip and board business, had $202.6m in 1998 revenues while Evans and Sutherland, an originator of 3D graphics, which started in 1968, had $191.8m in sales for the same year. One can only wonder if 3D technology is disruptive upon itself. Certainly Clayton Christensen made this case in the disk drive business.
Fundamental Forces
There are forces behind or supportive of this turmoil that are not easily modified. These include:
Consumers dominate the economy. In the US GDP consumer spending makes up 67.7% of the GDP while spending by businesses makes up only 15.5%. In the PC sector approximately 65% of the unit sales of PC are to business and only 35% to consumers. Guess where the future growth will be?There are basically only two classes of markets: big and niche. Big markets are consumer centric and niche markets everything else. Thus, companies that seek the middle ground will eventually find themselves being pulled to either end of this spectrum. Most companies fear big markets because if they cannot compete it is usually terminal.
Business models are at the center of business macroeconomics, company strategy and company valuation today. The Internet has turned the concept of what is a business model upside down. We maintain that this has only begun.
In a product and service world reliant on digital technology, Moore's law still drives innovation and economics. MIPS or transistors are free, due largely to Moore's law. As a result microprocessors are everywhere and this has only begun.
Media is going digital. The value to all is too great to overcome. However one should not confuse media with content. That is, as a result of our study we forecast that casual media is today, and will be in the future, the major driver with content lagging behind.
Forecasting the Future or Out-of-Box Inversion
It was observed this week by Donald A. Norman that consumers move slowing to shape new markets. We challenge this. The cell phone industry went from 1.2m users in 1987 to 55m in 1997. Certainly the attach rate to the Internet, including the online services such as AOL, has grown at high rates in the last 3 years. More importantly, the ability to shape new markets must be supported by investment. Here the Internet has shown the willingness of investors to bet on very high returns, as reflected in the high company evaluations and to do this in a short period of time. The market is based on expectations for future earnings. Thus, in spite of slow consumer action, if this is really the case, there must be an underlying infrastructure and the creation of new products and services. If the perceived gain is high, the markets will move quickly to seize the opportunity with the expectation of market share. Further, even if it can be claimed that consumer move slowly they are very rapid to use and discard products. Short time to market and short product life cycles, especially in new markets is the norm.
The digital consumer is an oxymoron. This is a technically centric distortion. Do not think PCs or even DVD but Wal Mart, school, the Dr's office and Safeway. Deer Hunter was successful in Wal Mart. When one thinks big markets this means all demographics not those that shop at Fry's.
The Internet is a transient. The Internet is not the end game but only a platform for digital connectivity. The analogy with power at the turn of the century applies to the Internet.
The PC has a problem. It is not consumer focused and makeovers will not do. Increasingly, for many consumers its major role is as an access device to the Internet and there is nothing keeping this from putting the PC in a secondary role in this function. In consumer markets the PC as a multifunction device is a detriment.
3D has a problem. The business model is devoid. Today's PC market is largely based on being predatory on 2D accelerators. This puts 3D chips into a market sweet spot of $20. Aside from niche markets the only mass market 3D is for games. Yet, the PC is struggling as a game play platform. When a game developer with only an ok Playstation title can sell 1m units and a good PC title sells only 200,000 units there is a problem. The asymmetry of the PC vs. video game console market is dramatically illustrated by the next generation Playstation. Sony will likely invest in excess of $750m in fabs for the next generation chips. Yet, the cost of the chips will exceed the selling price of the unit. However, one cannot lose sight of the simple fact that in this $51 billion company the Playstation and related income provided 26.5% of the profits of for the first half of the 1999 fiscal year. For Sony the Playstation is a business model issue - it is ok to lose money in the short term on the platform for the following reasons: this is the basis for the largest source of future revenue and profits the company will have. The profits will be made in higher gross margin games not the platform. The problem with 3D on the PC is that it has no flexibility in its business model. As a result PC 3D pales in comparison to Playstation 2 3D. We were struck this week by the quality of the imagery from the Playstation demonstration. 3D on the PC just cannot compete in an unsubsidized environment. It is all about business models.
These new markets are in for a shock when it comes to government involvement. The PC industry lives in this dream world of unfettered open market competition as the well spring of innovation. Certainly the Microsoft anti-trust trial has shattered that illusion. Having lived inside the beltway for over 20 years and interacted on the Hill I can only say that the PC industry is grossly naïve. There are basically only two simple rules for government involvement in industries and peoples lives:
(1) the vast majority of actions by Congress are driven by the intent to get more votes in the next election and (2) government is used as a lever in markets. Why did it looked so stupid that Vice President Gore claimed he was responsible for the Internet. This was just a vote collection trick that backfired. Why is the Congress so interested in the Internet - it impacts people's lives and therefore a source of votes. Further, government will be thrust into a role of arbitrating markets as per (2). This is exactly what happened in the lobbying for cable unbundling. Here AT&T and AOL were pitted against each other in a fierce campaign at the FCC. In addition, few realize that one of the most powerful lobbying organizations in Washington is the NAB (National Association of Broadcasters). Why do you think they got the HDTV spectrum for free when public policy is to auction spectrum? This all brings us to another inconsistency - government indifference to technology markets. This is just not in the cards.Market duds are already evident in the mad scramble to seize the opportunity. The set top box (STB) is in for a rude splash of cold water. Who wants it outside of the cable MSO's? There is every indication that retail sales of STB will go very slow if they even make it on time to meet the FCC mandate. Yet, the problem is larger that this - what consumer need is being met by the STB? Take for example, the current craze on personal television - a form of STB with a hard disk to allow consumers to record television programming. Have you ever timed the total amount of commercials during the national news or a movie which is shown by over the air broadcasting? Is TiVo or Replay going to implement automatic commercial elimination? No way. They want to cultivate advertisers not eliminate them. Who wants to pay $500 or more for a box to emphasize commercials? You have to be kidding. Yet, all of this masks a more fundamental market issue which was developed during the study - the future markets will transition from products to services. Just as the cell phone and DBS has transitioned from the product to service the same will be the underlying trend in these new markets. Further, merchant semiconductor chips are dead. Just as the discreet transistor has died the same will apply to even the X86 as a processor.
Underlying all of this is a huge market. Our preliminary and conservative estimate in the study is at a Total Available Market (TAM) of $62.1 billion of which $54.6 billion is services. One only has to keep in mind it is all about disruption, opportunity and consumers. A difficult triad for any company to execute within.
This last week only served to drive home that the transition, to what we have called the fifth era of computing, is well underway. It is not about the PC industry reborn but a new beginning.
***Trident Announces Portable 3D Chip
(April 26)
Trident Microsystems announced an AGP 3D-embedded-memory notebook shootout by announcing the CyberBlade e4-128.
The CyberBlade e4-128, which is a pin-compatible follow-up to the Cyber9525DVD is a integrated multimedia notebook controller with 4MB of embedded up-to-100MHz SDRAM. The combination of the CyberBlade 3D engine and the 128-bit wide memory bus gives CyberBlade e4-128 desktop equivalent performance. In the notebook market, the Cyberblade e4-128 offers at least two times the 3D WinBench99 performance of currently sampling competitor's 4MB multi-chip-module graphics controller solutions.
The Cyberblade e4-128 also saves space because the embedded memory eliminates the need for extra frame- buffer chips, and the small size of the package saves an additional 24 to 62% space on the notebook motherboard. Also, by embedding the memory and implementing the 2.5V core, power consumption is considerably reduced.
Thanks to the Accelerated Graphics Port (AGP) interface, the CyberBlade e4-128 can handle high-bandwidth 3D data transfer access supporting 2X AGP with sideband to facilitate texture fetching from the system memory for advanced gaming applications.
The chip is sampling now in engineering quantities and will be available for mass production this summer.
***Nagravision and SCM Microsystems Join Forces to Supply OpenCable and ATSC Security Modules (April 20)
NagraVision and SCM Microsystems entered into a definitive agreement to accelerate and improve the development of Point of Deployment (POD) security modules for enabling a new generation of Digital Cable Set-top Boxes and Cable Ready Digital TV Sets.
Under the agreement, SCM will optimize its latest conditional access module platform, the WorldCAM Series, to integrate Nagra's Conditional Access System software and smart cards. Final modules will be sold as part of a NAGRA end-to-end conditional access and systems management package to the cable and broadcast industries.
Based on NRSS-B, both companies expect availability of the POD modules in quantity by July 2000.
***Phoenix Technologies' BIOS Products Support Intel's 810 Chipset (April 26)
Phoenix Technologies announced that its BIOS products support the Intel 810.
***AOPEN Uses Intel 810
(May 3)
AOpen America has launched a motherboard, the AOpen MX3W, that integrates the Intel 810 chipset.
The MX3W supports both 66-and-100MHz front side bus for 366-to-466MHz Intel Celeron processors, and holds up to 512MB SDRAM. The board provides an upgrade path as well for future plans of 100MHz front-side bus Celeron processors, yet to be announced.
With its microATX form factor, the MX3W provides ample expansion capabilities for custom configurations. Three PCI and one AMR (Audio/Modem Riser) slots allow resellers to add networking, communications and other components as needed. AOpen plans to announce future high-performance AMR modem solutions, as this low-cost design feature becomes an industry standard.
The MX3W features a dual Ultra DMA 66 Bus Master IDE channel and onboard I/O solutions include: two serial ports, one parallel port, two-channel USB ports, game/MIDI port, two-channel EIDE and one floppy drive connector, and a 4MB flash ROM BIOS.
The AOpen MX3W is available now in the U.S. and Canada from AOpen authorized resellers at an estimated street price of $99, and is backed by a one-year, limited warranty.
***3Dfx Voodoo3 3000 In Evesham Win
(April 26)
Evesham Micros, a UK PC manufacturer, announced it will include the 3dfx Voodoo3 as a standard feature in its EveshamVale Scorcher and Platinum range of PCs.
Evesham Micros will feature the Voodoo3 3000 within selected models in its EveshamVale Scorcher-DVD range and its Platinum series. The Scorcher-DVD Voodoo3 offers a choice of Intel processors, with standard features including a DVD-ROM drive and the 16Mb Voodoo3 card.
Prices range from 1, 173.83 pounds sterling for the base level Scorcher DVD Voodoo3 to 2, 113.83 pounds sterling for the highest spec Platinum Voodoo3 Ultra.
Evesham Micros is based in Evesham, Worcestershire, UK.
***Tyan Unveils Motherboard Using Intel 810 AGPset (April 26)
Tyan Computer announced its S2054 Tomcat i810 high performance motherboard with integrated graphics, targeted at the volume PC market segments. This microATX mainboard for Intel socketed Celeron Processors is the first in a series of Tyan boards announced in concurrence with the Intel 810 AGPset.
Key features include: support for up to 512MB of industry standard SPD DRAM and ECC DRAM on two PC-100 DIMM sockets; four Bus Mastering PCI slots; Dual Channel UltraDMA/66 support; on-board AC-97 soft audio with game and speaker ports; two channel Universal Serial Bus (USB) support as well as standard I/O connectors (ps/2 keyboard connector, floppy connector, serial port, parallel ports).
Tomcat i810 is designed to accommodate both a 66MHz and a 100MHz front-side-bus. It will support all current and future socketed Celeron CPUs and supports an optional digital video out interface for LCD flat panels. In addition, an OEM AMR option is available for system integrators.
The Tomcat i810 with plug 'n' play flash BIOS is priced below $100 in OEM quantities with a three year manufacturer's warranty, and is Y2k compliant (per NSTL standards).
***Strata and BE Team Up on DevNet3D
(April 20)
Strata, a developer of 3D graphics, video editing, and special effects software, announced an expansion to its DevNet3D Initiative. By including Be Incorporated and the BeOS operating system in its open development model, Strata adds a strategic partner to its growing network of corporate and independent developers.
Strata and Be are teaming up to port StudioPro), its 3D modeling, rendering, and animation package, to the BeOS. StudioPro runs on Windows NT, Windows 98 and MacOS and is used by graphic designers, illustrators, animators, architects, multimedia authors, and web developers.
VideoShop, Strata's nonlinear editing package, is also being ported to BeOS. Currently running on the MacOS, VideoShop is a video editor available anywhere on the desktop. With support for FireWire, Quicktime 3.0, and features such as the 3D Track and animated preview icons, VideoShop brings high-end capabilities at a reasonable price.
http://www.strata.com/
http://www.3d.com/
http://www.be.com/
***OBVIOUS Media Manager, is Ready for Rollout (April 19)
Obvious Technology has announced the OBVIOUS Media Manager, a video asset management tool that reduces the cost of digital content management, speeds up the production process, and makes video easy to use on a network.
The OBVIOUS Media Manager enables content creators, such as movie, multimedia and TV producers, to view and comment on dailies, production clips and multimedia content via a network connection.
The Manager is capable of handling gigabytes of multimedia information. It enables users to locate, review, retrieve and purchase multimedia files from stock footage sources via the Internet as well as providing a technology to distribute and deliver rich multimedia across a variety of networks and platforms.
Obvious Technology's multimedia asset and digital content management products are based upon a universal multimedia envelope called an Object-Based Video Interface (OBVI) file. These interactive multimedia files can link video content to any type of existing media on a frame-accurate basis allowing complete control of video content and its seamless integration in conventional media network management systems.
All types of files, text, sound, HTML, still images, ODBC database tables, closed caption and even DNS/IP addresses can be linked to an EDL or captured video frame. Obvious' OBVI container can be up to a thousand times smaller than its corresponding video sequence which always remains untouched.
Obvious' products are open, fully integrated hardware/software solutions that can be integrated into existing server and network systems. The OBVIOUS Media Manager comes pre-installed on an SGI computer with two Pentium III processors, hard drives, etc. All required monitors, networking connectivity, digitization cards and other hardware components are also supplied, if required.
The OBVIOUS Media Manager, with enhanced network collaboration capabilities, video streaming, EDL and video management tools, will be available Q3/99 for $29,990 and will include five OBVIOUS Media Collaborator seats. The OBVIOUS Media Center, which will provide the Obvious Media Manager with complete web publishing capabilities, will be online by the end of 1999.
***3D Pipeline Announces glAnalyze
(April 2, 1999)
3D Pipeline announced the release of glAnalyze, designed for developers of OpenGL applications and hardware vendors. 3D Pipeline has rewritten the OpenGL driver to provide real-time information and offer control of OpenGL applications. glAnalyze allows you to see exactly what is going on inside OpenGL applications, set breakpoints and log out OpenGL sessions to avi movies or instructive text logs. The intent of an instrumented OpenGL driver is to make the process of understanding applications faster. This is important with applications written by others, containing complex source code or, without source code available.
Logging and control can be started and stopped at anytime, allowing you to ignore startup animations, setup screens or unimportant gameplay. It also provides control and logging only of the information that is important to you - even if all you want is a single frame in an entire game sequence.
As an OpenGL application runs, glAnalyze allows you to set breakpoints to stop rendering. Breakpoints can be set on end of frame, end of primitive, glError, or on specific OpenGL API entry points. This feature is especially useful for understanding individual primitives and frames. At break, the user can review all the prior API calls (including data) to see what lead up to the current display.
As glAnalyze runs, it provides real-time feedback on the counts of all primitives, what type of primitives they are (triangles, tristrips, quadstrips, etc), fragment clipping statistics, and frames per second. This eliminates guessing when determining per frame geometric complexity for games and benchmarks. You can find out what kind of primitives (and how many) are used in Quake, UnReal, ViewPerf, Indy3D, and any other OpenGL application. glAnalyze is often used to study existing applications, such as games, benchmarks and content creation tools. Game developers can study the competition to understand clearly how the models are built, the specifics of texturing, methods used for special effects and how state changes are minimized to improve performance. IHVs can capture benchmark and application streams to understand precisely which states must be supported in hardware and what primitive paths to optimize.
When developing application code, bugs often appear only during animation. Captured AVIs of OpenGL sessions can be used to track increasing quality of your application. AVIs may be stored with your bug database and source code control to understand the what and when of bug generation and elimination.
You can also log out all OpenGL activity to an easy to read text file. This file records all OpenGL API calls, variables, states and pointer data. To remember exactly what was in that log file, you can play the file back to an OpenGL window at any time using the glSH player. These text files allow you to see only what you need to. You can control how much detail you want to see (or log). You can view all vertex data or compact to study only state changes and display the contents of display lists or only log that a glList was executed as well as log all pointer data (such as texturemap definitions) or disable to minimize space and increase readability.
Playback your log files using the included program glSH, which makes use of drag and drop functions. The entire OpenGL session can be played back without the original application by simply dropping your log file onto glSH. You can log a game session, study the log and playback to recall exactly what occurred during the session.
You can log out your OpenGL session to an AVI file for later review. These files can be posted on Web sites for application demos without the application being present, or entered into your source tree to illustrate artifacts with a given release.
***TSMC Sees Demand Improve In First Quarter (April 20)
According to Newsbytes, Taiwan Semiconductor Manufacturing Co. has reported first quarter 1999 earnings down on the same period a year ago but up compared to the company's results in the fourth quarter of 1998.
Net sales in the quarter were NT$12.50 billion (US$381.91 million), down 20.6 percent on the year-ago period but up 7.5 percent on the final quarter of 1998. Net profit in the period were NT$4.09 billion ($124.96 million), down 41.4 percent on the year and up 62.3 percent on the previous quarter.
The company cited a jump in demand for chips as the background for the better quarter-on-quarter results.
TSMC operates wafer fabrication plants, producing chips for semiconductor companies that have no plants of their own.
Exchange rate: $1 = NT$32.73
***Diamond Multimedia reports First Quarter (April 21)
Diamond Multimedia a leader in reported financial results for the first quarter ended March 31, 1999.
For the quarter, net revenues were $144.0 million, compared to $186.2 million for the first quarter of 1998. Net income for the first quarter was $1.3 million, or $0.04 per share on a fully diluted basis, compared to a net income of $7.9 million, or $0.22 per share, in the first quarter of 1998.
"Our first quarter results reflect strong performance in our new product areas including our RioPort, Communications and Professional Graphics divisions, each of which was profitable for the quarter, and which collectively accounted for approximately 40% of our revenues. However, our Multimedia division experienced lower gross margins than we anticipated, and as a result that part of our business was not profitable. Going forward, we will continue to drive our Multimedia division to return to profitability by focusing our product line on a limited number of architectures, thereby reducing related costs, inventory and expenses. In addition, we intend to continue to invest in and capitalize on our early entrant advantage in the Internet audio and home networking markets," said William J. Schroeder, president and CEO.
***Evans & Sutherland Reports First Quarter Results (April 22)
Evans & Sutherland reported financial results for the first quarter ended April 2, 1999.
Sales for the quarter were $49.7 million, an increase of 17% over sales of $42.4 million for the first quarter of 1998. Net earnings for the quarter were $.3 million ($.02 per share) compared to $1.6 million ($.17 per share) for the first quarter of 1998.
Comments from James R. Oyler, President and Chief Executive Officer, "During the quarter, we saw increased demand which contributed to growth in both revenue and backlog throughout the company.
"The simulation group continued to perform well, with substantially higher orders than last year. We were awarded a $32 million order from Lockheed Martin to supply Ensemble simulation systems for the Combined Arms Tactical Trainer (CATT) in the United Kingdom.
"At the high end of our simulation business, we continued to win business with our Harmony image generators. However, as previously reported, we have experienced technical delays on several programs, which impacted both expenses and our balance sheet in the quarter. These technical problems are nearing resolution, which will allow significant balance sheet improvement in the second half of this year.
"Our workstation graphics group produced strong revenue growth, but with a larger loss than last year. This effect arose from an increase in the breakeven level following the change from a chip royalty stream last year to full board production this year. The other major factor affecting this group is slower than expected worldwide growth in the workstation graphics market. Until this situation changes, we will keep tight control on expenses, maintain market share and complete a full schedule of new product introductions.
"Overall we expect continued improvement during the next several quarters, but must continue to manage tightly in the volatile workstation business."
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